What is Mistake "lack of trading plan" in Trading?

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Fortunately, for the purposes of illustrating Mistake "lack of trading plan", there is a perfect analogy. Consider the following scenario. You hear others talk of a business with low barriers to entry and in which some individuals are getting rich beyond anyone's wildest dreams. After some consideration you decide to take the plunge and engage in that business yourself. It is a fair assumption that you will begin to do some planning before engaging in that business. In fact, if you are at all prudent the chances are great that you will do a lot of planning before diving in. Furthermore, during the planning process you may learn things that you did not know at the outset that could affect your business, and you will build in contingency plans to account for these factors as well.

If you are like most people, and if you truly desire to succeed, you may find yourself becoming consumed by the depth and breadth of your planning. You may take pride in your efforts, and the extent of your preparation may help you to build confidence in yourself and your chances for success. Finally, after much soul-searching and countless hours of planning and preparation, you take the plunge and attempt to succeed in your new business. There is nothing surprising in any of this. It happens all the time and is simply the way that people go about making their fortune. Except when it comes to futures trading.

In futures trading, a surprisingly high percentage of traders enter the markets without the slightest idea as to how they plan to succeed in the long run. Very few traders begin trading only after they have carefully thought through and planned their foray into the "exciting world of commodities speculation." Most are so anxious to get started that they just don't take the time to make the proper preparations. This phenomenon alone goes a very long way towards explaining the high rate of failure among futures traders.